The Secret HSBC Bank Tax Files Explained

HSBC’s Swiss bank has been accused of helping some clients evade tax, according to a huge number of files about secret accounts that have been published. But what exactly is the bank alleged to have done?

:: Were the practices illegal?

HSBC, the world’s second-largest bank, is facing claims that its Swiss banking arm helped some clients dodge taxes and conceal millions of dollars-worth of assets.

According to the Guardian, which was part of a group of news outlets that obtained the files, HSBC’s Swiss private bank allowed practices including: Regularly permitting clients to withdraw bundles of cash, often in foreign currencies that would be of little use in Switzerland; marketing tax avoidance strategies to wealthy clients; colluding with some clients to hide undeclared accounts from authorities; and allowing high-risk customers, including international criminals and corrupt businessmen, to have accounts. Holding a secret bank account isn’t illegal, but it’s against the law to use it to deliberately hide cash to dodge tax.

:: Who is said to have been involved?

The documents contain details of more than 100,000 clients from around the world, according to the BBC, one of the media outlets that has seen them. The Guardian reports that, “Hollywood stars…. royalty and clothing merchants feature in the files, along with the heirs to some of Europe’s biggest fortunes”.

The paper also claims the files show that HSBC’s Swiss bankers were prepared to help convicted blood diamond dealer Emmanuel Shallop. One memo says: “The client is currently being very careful because he is under pressure from the Belgian tax authorities who are investigating his activities in the field of diamond tax evasion.” The newspaper reports that in another memo, an HSBC manager apparently discusses how a London-based financier and his partner could “cheat” on Italian tax, saying: “The risk for the couple is, of course, that when they return to Italy the UK tax authorities will pass on information on them to the Italian tax authorities. My own view on this was that… there clearly was a risk.”

:: How did the files emerge?

The documents are based on data that was originally exposed by a former HSBC employee-turned-whistle-blower, named Hervé Falciani, and handed to French authorities in 2008.

According to The International Consortium of Investigative Journalists (ICIJ), the French newspaper, Le Monde, obtained the material from a French tax authority investigation into the documents. It then shared them with the ICIJ, which pulled together a team of more than 140 journalists, from 45 countries, to sift through the data. The Guardian says the documents have formed the biggest banking leak in history.

:: Were Britons involved?

The files include details of almost 7,000 British clients, according to the BBC – although it’s not known how much was held in their accounts. HM Revenue and Customs was passed the leaked data in 2010 and has managed to claw back £135m from some of the 3,600 Britons who were identified as using the Swiss branch of HSBC to potentially avoid tax.

:: Who was in charge of the bank at the time?

Stephen Green – now Lord Green – was the man in charge of HSBC during the period covered by the files. He served as the Chief Executive of the global bank and then went on to become Group Chairman. In 2010, he left to become a minister of trade and investment in David Cameron’s government, a position he held until 2013. He told the BBC’s Panorama programme: “As a matter of principle I will not comment on the business of HSBC, past or present”.